Covestro’s acquisition of DSM’s resin business cleared unconditionally in Phase I

On 5 February, the European Commission (“EC”) approved Covestro’s acquisition of Koninklijke DSM’s Resins Functional Materials business following a Phase I investigation.Both parties are active in the production and sale of coating resins components (e.g. liquid resins and crosslinkers) resulting in horizontal overlaps in a number of markets; due to Covestro’s activities in the production and sale of inputs for coating resin components the transaction also had a vertical component. In line with the EC’s approach in previous cases, the market for resin components was segmented by the chemical component of the end product (e.g. liquid resin or crosslinker), by delivery technology (e.g. water-borne or solvent-borne), by resin chemistry (e.g. acrylics or polyurethanes) and for some the products by industrial application (e.g. automotive or industrial wood), resulting in a myriad of relevant markets, in which the parties’ positions had to be assessed.RBB Economics supported the parties amongst others in the calculation of market shares for these markets and in developing economic arguments around the absence of foreclosure risks with regard to vertically affected markets. Following a Phase I investigation, the EC cleared the transaction unconditionally because in each of the markets under consideration, the combined market shares of the parties or the market share increments brought by the transaction are limited and several other well-established players are present.The press release can be found here.RBB worked alongside law firms Linklaters and Allen & Overy.